Encorium moves back closing date for US business sale

Troubled US-based contract research organisation (CRO) Encorium has moved back the anticipated closing date for the sale of its US business to Italian CRO Pierrel.

The transaction is now expected to close by 15 July 2009, rather than on 30 June 2009 as previously scheduled. Pierrel’s letter of intent to acquire the US business was recently amended to set a purchase price of 17% of Encorium’s US backlog at closing, minus the amount that assumed current liabilities exceeded acquired current assets by more than $500,000.

In the original letter of intent, this deficiency allowance was $350,000. Encorium has also now changed its projection for the US backlog at closing, from the US$11.5 million anticipated last month (that assumed a closing date of 30 June) to an updated US$10.7 million.

The US CRO still expects that the liabilities to be assumed by Pierrel at closing will exceed the relevant Encorium assets by more than the $500,000 deficiency allowance, ruling out any cash gain from the sale.

Another adjustment is in the negotiations to sell off the CRO’s owned European subsidiary, Encorium Oy, to an unidentified “leading full-service clinical research organisation based in the United States and with operations globally”.

Encorium now predicts this transaction will close in the fourth quarter of 2009, whereas last month it expected the deal to wrap up in the third-quarter.